Attached files
| file | filename |
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| 8-K - Emmaus Life Sciences, Inc. | v187590_8k.htm |
| EX-10.3 - Emmaus Life Sciences, Inc. | v187590_ex10-3.htm |
| EX-10.1 - Emmaus Life Sciences, Inc. | v187590_ex10-1.htm |
THIS NOTE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
CNS
RESPONSE, INC.
SECURED
PROMISSORY NOTE
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$250,000.00
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December
2, 2010
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Aliso
Vejo, California
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FOR VALUE
RECEIVED, CNS Response, Inc., a Delaware corporation (the “Company”), promises to pay to
Mr. John Pappajohn (“Investor”, or “Noteholder”), or his
registered assigns, in lawful money of the United States of America, the
principal sum of Two Hundred Fifty Thousand Dollars ($250,000.00), together with
a single payment of accrued interest calculated based on the actual days
outstanding and a 360 day year at a rate of nine percent (9%). Such
interest shall be paid pursuant to Section 2 below (“Interest
Payment”). All unpaid principal, together with the accrued interest
and other amounts payable under this Secured Promissory Note (this “Note”) shall be due and
payable, on the earliest of (i) the maturity date of December 2, 2010
(“Maturity Date”), (ii) upon prepayment of this Note pursuant to Section 3
below, (iii) the
closing of a financing in which the aggregate proceeds to the Company are not
less than $3,000,000 (which, for the purposes of clarity, shall include a
financing transaction that involves multiple closings), or (iv) when, upon
or after the occurrence of an Event of Default (as defined below), such amounts
are made due and payable in accordance with the terms
hereof. This Note is secured by a lien on all of the assets of
the Company granted pursuant to the terms of Section 5 of the Bridge Note and
Warrant Purchase Agreement, dated as of the date hereof between the Company and
Investor (the “Purchase
Agreement”).
The
following is a statement of the rights of Investor and the conditions to which
this Note is subject, and to which the Company and Investor agree:
1. Definitions. As
used in this Note, the following capitalized terms have the following
meanings:
(a) “Company” includes the
corporation initially executing this Note and any Person which shall succeed to
or assume the obligations of the Company under this Note.
(b) “Investor” shall mean the
Person specified in the introductory paragraph of this Note or any other Person
who is the registered holder of this Note.
(c) “Outstanding Debt” shall mean,
as of a particular time, the sum of (i) the then outstanding principal amount of
this Note and (ii) the amount of interest due pursuant to the Interest
Payment.
(d) “Person” shall mean and include
an individual, a partnership, a corporation (including a business trust), a
joint stock company, a limited liability company, an unincorporated association,
a joint venture or other entity or a governmental authority.
(e) “Securities Act” shall mean the
Securities Act of 1933, as amended.
2. Interest
Payment. Subject to Section 3, the Interest Payment shall be
payable at the same time the principal amount of the Note is repaid as described
in the first paragraph hereof.
3. Prepayment. This
Note may be prepaid, in whole or part, at any time by the
Company. All prepayment amounts shall first be applied to any accrued
interest with the remainder applied towards the outstanding principal (“Full Prepayment” or “Partial
Prepayment”). Investor agrees to deliver the original of this
Note (or a notice to the effect that the original Note has been lost, stolen or
destroyed along with an indemnity with respect thereto in a form satisfactory to
the Company) at the closing of the Full Prepayment for cancellation or Partial
Prepayment for the appropriate principal adjustment; provided, however, that upon
Full Prepayment of the amounts set forth above with respect to the Outstanding
Debt, the Outstanding Debt shall be deemed satisfied and paid in full and the
Company shall have no other obligation with respect to the Outstanding Debt,
whether or not this Note is delivered for cancellation as set forth in the
preceding sentence.
4. Notice of
Defaults. The Company shall furnish to Investor written notice of the
occurrence of any Event of Default hereunder promptly following the occurrence
thereof.
5. Events of
Default.
(a) The
occurrence of any of the following shall constitute an “Event of
Default”:
(i) Failure
of the Company to pay the principal or the Interest Payment on this Note when
due.
(ii) Failure
of the Company to perform or observe any covenant or agreement as required by
this Note and continuation of such failure for a period of ten (10) days
following written notice from Investor.
(iii) The
Company makes a general assignment for the benefit of creditors.
(iv) Any
proceeding is instituted by or against the Company seeking to adjudicate it
bankrupt or insolvent, and such proceeding is not dismissed within sixty (60)
days.
(v) The
entry against the Company of a final judgment, decree or order for the payment
of money in the excess of $25,000 and the continuance of such judgment, decree
or order unsatisfied for a period of thirty (30) days without a stay of
execution.
(vi) Any
representation or warranty of the Company made in this Note is proven not to
have been true and correct in any material respect as of the date of this
Note.
(b) If
an Event of Default occurs and is continuing, Investor may exercise any or all
of the following rights and remedies:
(i) Declare
the Note and the Interest Payment be immediately due and payable, and upon such
declaration, the Note and the Interest Payment shall immediately be due and
payable, without presentment, demand, protest or any notice of any kind, all of
which are expressly waived.
(ii) Exercise
any and all other rights and remedies available to Investor under Section 5 of
the Purchase Agreement and otherwise available to creditors at law and in
equity.
6. Successors and
Assigns. Subject to the restrictions on transfer described in
Sections 8 and 10 below, the rights and obligations of the Company and Investor
shall be binding upon and benefit the successors, assigns, heirs, administrators
and transferees of the parties.
7. Waiver and
Amendment. Any provision of this Note may be amended, waived
or modified upon the written consent of the Company and Investor. Any such
amendment, waiver or modification effected in accordance with this
paragraph shall be binding upon the Company and Investor.
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8. Transfer of this
Note. With respect to any offer, sale or other disposition of
this Note, Investor will give written notice to the Company prior thereto,
describing briefly the manner thereof, together with a written opinion of
Investor’s counsel, or other evidence if reasonably satisfactory to the Company,
to the effect that such offer, sale or other distribution may be effected
without registration or qualification (under any federal or state law then in
effect, as applicable). Upon receiving such written notice and reasonably
satisfactory opinion, if so requested, or other evidence, the Company, as
promptly as practicable, shall notify Investor that Investor may sell or
otherwise dispose of this Note, all in accordance with the terms of the notice
delivered to the Company. This Note thus transferred shall bear a
legend as to the applicable restrictions on transferability in order to ensure
compliance with the Act, unless in the opinion of counsel for the Company such
legend is not required in order to ensure compliance with the Securities
Act. The Company may issue stop transfer instructions to its transfer
agent in connection with such restrictions. Subject to the foregoing,
transfers of this Note shall be registered upon registration books maintained
for such purpose by or on behalf of the Company. Prior to
presentation of this Note for registration of transfer, the Company shall treat
the registered holder hereof as the owner and holder of this Note for the
purpose of receiving all payments of principal and the Premium Payment and for
all other purposes whatsoever, whether or not this Note shall be overdue and the
Company shall not be affected by notice to the
contrary. Notwithstanding the foregoing, Investor may assign this
Note to an affiliated entity without the prior written consent of the Company so
long as such assignment complies with applicable law.
9. Representations
and Warranties.
(a) Investor
represents and warrants to the Company that:
(i) Authorization. Investor
has full power and authority to enter into this Note. This Note
constitutes a valid and legally binding obligation of Investor, except as
limited by bankruptcy, insolvency or other laws of general application relating
to or affecting the enforcement of creditors’ rights generally and general
principles of equity.
(ii) Accredited
Investor. Investor is an “accredited investor” within the
meaning of Rule 501 of Regulation D promulgated under the Securities
Act.
(b) The
Company represents and warrants to Investor that:
(i) Existence of
Company. The Company is a duly organized Delaware
corporation. The Company is validly existing in all jurisdictions
where it conducts its business.
(ii) Authority to
Execute. The execution, delivery and performance by the
Company of this Note and any financing statements hereunder are within the
Company’s corporate powers, have been duly authorized by all necessary corporate
action, do not and will not conflict with any provision of law or organizational
document of the Company (including its Certificate of Incorporation or Bylaws)
or of any agreement or contractual restrictions binding upon or affecting the
Company or any of its property and need no further
stockholder or creditor consent.
(iii) No Stockholder Approval
Required. No approval of the Company’s stockholders is
required for the issuance of this Note or the granting of the security interest
hereunder.
(iv) Binding
Obligation. This Note is a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
subject, as to enforcement of remedies, to applicable bankruptcy, insolvency,
moratorium, reorganization and similar laws affecting creditors’ rights
generally and to general equitable principles.
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(v) Litigation. Except
as previously disclosed to Investor, no litigation or governmental proceeding is
pending or threatened against the Company which may have a materially adverse
effect on the financial condition, operations or prospects of the
Company, and to the knowledge of the Company, no basis therefore
exists.
(vi) Intellectual
Property. To the best of the Company’s knowledge, the Company
owns or possesses sufficient legal rights to all patents, trademarks, service
marks, trade names, copyrights, trade secrets, licenses, information and other
proprietary rights and processes necessary for its business as now conducted and
as presently proposed to be conducted, without any known infringement of the
rights of others. There are no outstanding options, licenses or
agreements of any kind relating to the foregoing proprietary rights, nor is the
Company bound by or a party to any options, licenses or agreements of any kind
with respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information and other proprietary rights and processes
of any other person or entity other than such licenses or agreements arising
from the purchase of “off the shelf” or standard products.
10. Assignment by the
Company. Neither this Note nor any of the rights, interests or
obligations hereunder may be assigned, in whole or in part (other than by
operation of law) by the Company without the prior written consent of
Investor.
11. Notices. All
notices, requests, demands, consents, instructions or other communications
required or permitted hereunder shall be in writing and faxed, mailed or
delivered to each party at the respective addresses of the parties as set forth
on the signature page hereto, or at such other address or facsimile number as a
party shall have furnished to the other party in writing. All such
notices and communications will be deemed effectively given the earlier of
(i) when received, (ii) when delivered personally, (iii) one
business day after being delivered by facsimile (with receipt of appropriate
confirmation), (iv) one business day after being deposited with an
overnight courier service of recognized standing or (v) four days after
being deposited in the U.S. mail, first class with postage prepaid.
12. Employees and
Agents. Investor may take any action hereunder by or through
agents or employees so long as such agents or employees are duly authorized to
so act on behalf of the Investor.
13. Payment. Payment
shall be made in lawful tender of the United States.
14. Expenses;
Waivers. If this Note is not paid when due and Investor takes
any action to enforce Investor’s rights hereunder, the Company shall promptly
pay upon demand by Investor all such reasonable costs of collection, including
reasonable attorneys’ fees, whether or not litigation is
commenced. The Company hereby waives notice of default, presentment
or demand for payment, protest or notice of nonpayment or dishonor and all other
notices or demands relative to this instrument. The Company also
shall pay for all attorney’s fees incurred by Investor related to the drafting
and preparation of this Note.
15. Governing
Law. This Note and all actions arising out of or in connection
with this Note shall be governed by and construed in accordance with the laws of
the State of California, without regard to the conflicts of law provisions of
the State of California, or of any other state.
16. Effectiveness. This
Note shall become effective upon the execution by the Company and
Investor.
[Remainder
of Page Intentionally Left Blank]
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The Company has caused this Note to be
issued as of the date first written above and agrees to all the terms set forth
above.
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CNS
RESPONSE, INC.
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By:
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Name: George
Carpenter
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Its: Chief
Executive Officer
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Address:
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85
Enterprise, Suite 410
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Aliso
Vejo, CA
92656
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Accepted
and agreed:
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INVESTOR:
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Mr.
John Pappajohn
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Address:
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666
Walnut Street
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Suite
2116
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Des
Moines, IA 50309
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